Mercosur: the dilemma between the customs union and a free trade area

Honorio Kume () and Guida Piani ()

Brazilian Journal of Political Economy, 2005, vol. 25, issue 4, 370-390

Abstract: In 2001, the government of Argentina – facing a major economic crisis – took a rather controversial decision and reduced the tariff rates of all capital goods to zero. This became a main source of conflict with Brazil, the only country of Mercosur that produces such goods. This paper discusses two possible scenarios for the resolution of this issue. In the first one, the countries would opt for the maintenance of the customs union. The authors present some suggestions for the rebuilding of the Common External Tariff (CET), by which the countries would take a middle course acceptable to all. The other possible outcome would be a step back in the direction of a free trade area, with no CET at all. JEL Classification: F13, F15.

Keywords: Mercosur; Regional Integration; Tariff (search for similar items in EconPapers)
Date: 2005
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